Fidelity Special Situations Class of the Fidelity Capital Structure Corp.

Transcription

1 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Semi-Annual Management Report of Fund Performance May 31,

2 Caution Regarding Forward-looking Statements Certain portions of this report, including, but not limited to, Results of Operations and Recent Developments, may contain forward-looking statements about the Fund, including its strategy, risks, expected performance and condition. Forward-looking statements include statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as expects, anticipates, intends, plans, believes, estimates and similar forward-looking expressions or negative versions thereof. In addition, any statement that may be made concerning future performance, strategies or prospects, and possible future Fund action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Fund and economic factors. Accordingly, assumptions concerning future economic and other factors may prove to be incorrect at a future date. Forward-looking statements are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied in any forward-looking statements made by the Fund. Any number of important factors could contribute to these digressions, including, but not limited to, general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, business competition, technological change, changes in government regulations, unexpected judicial or regulatory proceedings, and catastrophic events. It should be stressed that the above-mentioned list of important factors is not exhaustive. You are encouraged to consider these and other factors carefully before making any investment decisions and you are urged to avoid placing undue reliance on forward-looking statements. Further, you should be aware of the fact that the Fund has no specific intention of updating any forward-looking statements whether as a result of new information, future events or otherwise, prior to the release of the next Management Report of Fund Performance.

3 Semi-Annual Management Report of Fund Performance as at May 31, Fidelity Special Situations Class of the Fidelity Capital Structure Corp. This semi-annual management report of fund performance contains financial highlights but does not contain the complete semi-annual financial statements for the investment fund. You can get a copy of the semi-annual financial statements at your request, and at no cost, by calling , by writing to us at Fidelity Investments, 483 Bay St. Suite 3, Toronto ON M5G 2N7 or by visiting our website at or SEDAR at Securityholders may also contact us using one of these methods to request a copy of the investment fund s proxy voting policies and procedures, proxy voting disclosure record or quarterly portfolio disclosure relating to the investment fund. Management Discussion of Fund Performance Results of Operations Fidelity Special Situations Class (Fund) invests substantially all of its assets in securities of Fidelity Special Situations Fund (Underlying Fund). Fidelity Special Situations Class, Series B, returned 11.5%, after fees and expenses, for the six-month period ended May 31,. The net returns of the other series of this Fund are similar to those of Series B, except for differences attributable to expense structures. During the review period, the broad Canadian equity market, as represented by the S&P/TSX Composite Index, returned 3.2% (in Canadian dollar terms). Market overview: During the first half of the review period, Canadian equities rose on the strength of banking and oil and gas stocks. Canadian banks share prices rose, largely on the basis of continued positive investor sentiment, including a spillover effect from strength in U.S. financial stocks, which rallied after the recent U.S. presidential election. Oil prices rose during the first half of the period, following the agreement of the Organization of the Petroleum Exporting Countries (OPEC) to reduce crude output. However, during the second half of the review period, investors concerns about depressed oil prices, rising household debt and risks of a correction in the housing market weighed on Canadian equities. The Bank of Canada maintained its overnight rate target at.5% at its May meeting, highlighting the ongoing competitiveness challenges for exporters and subdued wage growth. Factors affecting performance: The Fund s benchmark returned 3.4%, in Canadian dollar terms, for the period under review. The Fund s specific blended benchmark is a combination of the 7.% S&P/TSX Completion Index and 3.% Russell 25 Index. The Fund s outperformance of the benchmark was primarily attributable to the Underlying Fund s exposure to certain stocks in the information technology sector. In the sector, exposure to U.S.-based semiconductor company, Advanced Micro Devices, Canada-based software and services firm, Shopify, U.S.-based software and services firm, Take-Two Interactive Software, credit card processing company, Square, and supply chain solutions provider, Kinaxis, contributed to relative returns. In addition, lower-than-benchmark exposure to the energy sector also contributed. In the sector, a lack of exposure to oil and gas companies contributed to relative returns. In contrast, exposure to certain stocks in the industrials and materials sector detracted from relative performance. In the industrials sector, investments in Canada-based capital goods firm, Badger Daylighting, and U.S.-based integrated waste services company, Waste Connections, detracted from relative returns. In the materials sector, exposures to Canada-based gold miner, Tahoe Resources, and copper mining firm, First Quantum Minerals, detracted from relative returns. Among other sectors, exposure to Canada-based media firm, Yellow Pages, detracted from relative returns. Portfolio Changes: During the review period, the portfolio manager increased the Underlying Fund s exposure to the consumer discretionary and the information technology sectors. In the consumer discretionary sector, exposure was added to Canada-based apparel company, Gildan Activewear, whose fundamentals were showing signs of improvement and whose stock was trading at an attractive valuation. Exposure was also added to U.S.-based electronic commerce company, Amazon, given its dominance in the e-commerce business and earnings growth potential. In the information technology sector, exposure was added to U.S.-based software and services firm, Square. The portfolio manager believes the company s fundamentals are continuing to improve on strong management team execution. In contrast, exposure was reduced to the financials and health care sectors. In the financials sector, the portfolio manager sold off holdings in U.S.-based diversified financial firms such as Morgan Stanley and Goldman Sachs, and banking firms such as Fifth Third Group and Bank of America. The portfolio manager believed that the investment thesis had played out and these holdings lacked further upside potential. The portfolio manager also reduced holdings in the health care sector. In the sector, holdings in U.S.-based medical cannabis producer, Mettrum Health, was closed. The stock had rallied and the manager believed the good news for the company had been fully priced in. The Underlying Fund s holding in U.S.-based biopharmaceutical company, Alexion Pharmaceuticals, was also closed. The fundamentals of the company were not improving as rapidly as the manager had anticipated and he opted to find opportunities with greater upside potential elsewhere. 1

4 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Management Discussion of Fund Performance continued Recent Developments Portfolio manager, Mark Schmehl, continues to be positive on equity markets, but on the margin he has reduced the risk of the portfolio, believing that the market is not compensating for excess risk. He has emphasized this by swapping out some of the gold mining exposure for a gold exchange-traded fund. In general, Mr. Schmehl is more optimistic about U.S. equities than Canadian equities. He notes that some of the investment themes he had previously invested in, such as artificial intelligence and U.S. banks, have now become overcrowded and sentiment may be subsiding. Overall, his investment approach remains focused on identifying positive change in company fundamentals and looking to add value through opportunities where business conditions are improving. At the end of the review period, the Underlying Fund had its largest absolute exposure to the information technology sector, followed by the consumer discretionary sector. The Underlying Fund diverged the most from the benchmark sector weightings by having more exposure to the information technology sector and lower exposures to the real estate and financials sector. In terms of country exposures, Canada accounted for the largest allocation, followed by the U.S. Independent Review Committee Effective February 28,, Helen M. Meyer retired from the Independent Review Committee and was replaced by James E. Cook as Chair. Also effective on that date, Frances Horodelski of Toronto, Ontario, became a member of the Independent Review Committee. 2

5 Related Party Transactions Manager and Portfolio Adviser The Fund is managed by Fidelity Investments Canada ULC (Fidelity). Fidelity is part of a broader group of companies collectively known as Fidelity Investments. Fidelity provides or arranges for the provision of all general management and administrative services required by the Fund in its day to day operations, bookkeeping, record keeping and other administrative services for the Fund. Fidelity is the portfolio adviser to the Fund and it provides investment advisory services to the Fund. Fidelity provides investment advice with respect to the Fund s investment portfolio and arranges for the acquisition and disposition of portfolio investments, including all necessary brokerage arrangements. The Fund pays Fidelity a monthly management and advisory fee for their services, based on the net asset value of each Series, calculated daily and payable monthly. The Fund paid Fidelity management and advisory fees of $2,24, for the period ended May 31,. Administration Fee Fidelity charges the Fund a fixed administration fee in place of certain variable expenses. Fidelity, in turn, pays all of the operating expenses of the Fund, other than certain specified fund costs (e.g. the fees and expenses of the Independent Review Committee, taxes, brokerage commissions and interest charges). The Fund pays an annual rate, which is calculated on a tiered basis, based on the net asset value of each Series, calculated daily and payable monthly. The Fund paid Fidelity administration fees of $248, for the period ended May 31,. 3

6 Financial Highlights The following tables show selected key financial information about the Fund and are intended to help you understand the Fund s financial performance for the period end of the years shown. This information is derived from the Fund s audited annual and/or unaudited semi-annual financial statements. Please see the front page for information about how you can obtain the Fund s annual or semi-annual financial statements. Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series A ended May 31, Periods ended November 3, Net assets, beginning of period B $ $ 2.2 $ $ $ $ 1.24 Total revenue Total expenses (excluding distributions) (.28) (.49) (.49) (.45) (.35) (.28) Realized gains (losses) Unrealized gains (losses) (1.11) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.21) (1.23) Return of capital Total distributions B,C (.21) (1.23) Net assets, end of period B $ $ $ 2.2 $ $ $ Net asset value (s) D $ 43,187 $ 36,434 $ 33,615 $ 38,583 $ 35,576 $ 28,877 Securities outstanding D 1,836,581 1,78,21 1,679,994 2,114,462 2,181,789 2,54,929 Management expense ratio E,F 2.47% 2.47% 2.49% 2.55% 2.56% 2.52% Management expense ratio before waivers or absorptions E,F 2.56% 2.56% 2.56% 2.56% 2.56% 2.52% Trading expense ratio G.39%.45%.26%.42%.49%.66% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% 5.5% Net asset value per security, end of period $ $ $ 2.27 $ $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series B ended May 31, Periods ended November 3, Net assets, beginning of period B $ $ 2.33 $ $ $ $ 1.31 Total revenue Total expenses (excluding distributions) (.26) (.45) (.46) (.42) (.33) (.26) Realized gains (losses) Unrealized gains (losses) (.99) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.26) (1.29) Return of capital Total distributions B,C (.26) (1.29) Net assets, end of period B $ $ $ 2.33 $ $ $ Net asset value (s) D $ 85,151 $ 66,196 $ 76,814 $ 73,368 $ 58,11 $ 33,79 Securities outstanding D 3,566,74 3,49,53 3,777,827 3,967,992 3,518,981 2,94,51 Management expense ratio E,F 2.26% 2.26% 2.29% 2.32% 2.34% 2.32% Management expense ratio before waivers or absorptions E,F 2.32% 2.32% 2.32% 2.32% 2.34% 2.32% Trading expense ratio G.39%.45%.26%.42%.49%.66% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% 5.5% Net asset value per security, end of period $ $ $ $ $ $

7 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series F ended May 31, Periods ended November 3, Net assets, beginning of period B $ $ $ 19.9 $ $ 12.6 $ 1.72 Total revenue Total expenses (excluding distributions) (.14) (.24) (.24) (.23) (.18) (.14) Realized gains (losses) Unrealized gains (losses) (1.5) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.56) (1.66) Return of capital Total distributions B,C (.56) (1.66) Net assets, end of period B $ $ $ $ 19.9 $ $ 12.6 Net asset value (s) D $ 81,73 $ 46,921 $ 36,56 $ 29,479 $ 16,914 $ 7,276 Securities outstanding D 3,196,564 2,18,281 1,649,87 1,481, ,174 63,292 Management expense ratio E,F 1.12% 1.12% 1.13% 1.19% 1.21% 1.19% Management expense ratio before waivers or absorptions E,F 1.19% 1.19% 1.19% 1.2% 1.21% 1.19% Trading expense ratio G.39%.45%.26%.42%.49%.66% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% 5.5% Net asset value per security, end of period $ $ $ $ $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series F5 ended May 31, Periods ended November 3, I Net assets, beginning of period B $ $ $ $ $ 2. Total revenue Total expenses (excluding distributions) (.17) (.32) (.33) (.33) (.18) Realized gains (losses) Unrealized gains (losses) (1.3) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.7) (2.2) Return of capital (.66) (1.31) (1.31) (1.28) (.58) Total distributions B,C (1.36) (3.51) (1.31) (1.28) (.58) Net assets, end of period B $ 31.9 $ $ $ $ Net asset value (s) D $ 1,669 $ 1,213 $ 1,641 $ 971 $ 229 Securities outstanding D 53,174 4,855 56,19 35,223 9,1 Management expense ratio E,F 1.11% 1.12% 1.13% 1.21% 1.23% Management expense ratio before waivers or absorptions E,F 1.18% 1.19% 1.19% 1.22% 1.23% Trading expense ratio G.39%.45%.26%.42%.49% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% Net asset value per security, end of period $ $ $ $ $

8 Financial Highlights continued Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series F8 ended May 31, Periods ended November 3, I Net assets, beginning of period B $ 27.7 $ $ 26.8 $ 25.8 $ 2. Total revenue Total expenses (excluding distributions) (.16) (.29) (.31) (.32) (.2) Realized gains (losses) Unrealized gains (losses) (.73) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.64) (2.8) Return of capital (1.8) (2.15) (2.11) (1.6) (.93) Total distributions B,C (1.72) (4.23) (2.11) (1.6) (.93) Net assets, end of period B $ $ 27.7 $ $ 26.8 $ 25.8 Net asset value (s) D $ 1,137 $ 764 $ 371 $ 128 $ 1 Securities outstanding D 39,879 28,247 13,399 4, Management expense ratio E,F 1.12% 1.12% 1.9% 1.21% 1.36% Management expense ratio before waivers or absorptions E,F 1.19% 1.18% 1.15% 1.23% 1.36% Trading expense ratio G.39%.45%.26%.42%.49% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% Net asset value per security, end of period $ $ $ $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series T5 ended May 31, Periods ended November 3, I Net assets, beginning of period B $ $ $ 27.1 $ $ 2. Total revenue Total expenses (excluding distributions) (.38) (.69) (.71) (.67) (.37) Realized gains (losses) Unrealized gains (losses) (.69) (.4) 5.17 Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.27) (1.73) Return of capital (.65) (1.3) (1.3) (1.27) (.58) Total distributions B,C (.92) (3.3) (1.3) (1.27) (.58) Net assets, end of period B $ 31.5 $ $ $ 27.1 $ Net asset value (s) D $ 2,443 $ 2,644 $ 1,35 $ 641 $ 9 Securities outstanding D 79,42 91,94 47,691 23,725 3,551 Management expense ratio E,F 2.52% 2.5% 2.5% 2.48% 2.47% Management expense ratio before waivers or absorptions E,F 2.61% 2.59% 2.57% 2.49% 2.47% Trading expense ratio G.39%.45%.26%.42%.49% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% Net asset value per security, end of period $ $ $ $ $

9 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series T8 ended May 31, Periods ended November 3, I Net assets, beginning of period B $ $ $ $ 24.9 $ 2. Total revenue Total expenses (excluding distributions) (.34) (.64) (.7) (.68) (.39) Realized gains (losses) Unrealized gains (losses) (1.4) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.24) (1.61) Return of capital (1.5) (2.1) (2.6) (1.6) (.93) Total distributions B,C (1.29) (3.72) (2.6) (1.6) (.93) Net assets, end of period B $ $ $ $ $ 24.9 Net asset value (s) D $ 13,228 $ 1,266 $ 3,156 $ 1,818 $ 14 Securities outstanding D 477, , ,61 69,32 5,639 Management expense ratio E,F 2.54% 2.53% 2.54% 2.61% 2.63% Management expense ratio before waivers or absorptions E,F 2.63% 2.62% 2.61% 2.63% 2.63% Trading expense ratio G.39%.45%.26%.42%.49% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% Net asset value per security, end of period $ $ $ $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series S5 ended May 31, Periods ended November 3, I Net assets, beginning of period B $ $ 28.5 $ $ $ 2. Total revenue Total expenses (excluding distributions) (.35) (.62) (.65) (.61) (.33) Realized gains (losses) Unrealized gains (losses) 1.8 (.93) (.55) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.34) (1.81) Return of capital (.65) (1.3) (1.3) (1.28) (.58) Total distributions B,C (.99) (3.11) (1.3) (1.28) (.58) Net assets, end of period B $ $ $ 28.5 $ $ Net asset value (s) D $ 1,95 $ 1,19 $ 1,967 $ 1,216 $ 629 Securities outstanding D 42,38 32,369 69,12 44,848 24,78 Management expense ratio E,F 2.31% 2.28% 2.26% 2.26% 2.26% Management expense ratio before waivers or absorptions E,F 2.37% 2.34% 2.29% 2.27% 2.26% Trading expense ratio G.39%.45%.26%.42%.49% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% Net asset value per security, end of period $ $ $ $ $

10 Financial Highlights continued Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series S8 ended May 31, Periods ended November 3, I Net assets, beginning of period B $ $ 26.9 $ $ $ 2. Total revenue Total expenses (excluding distributions) (.31) (.59) (.63) (.59) (.33) Realized gains (losses) Unrealized gains (losses) (.3) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.31) (1.7) Return of capital (1.6) (2.12) (2.7) (1.6) (.93) Total distributions B,C (1.37) (3.81) (2.7) (1.6) (.93) Net assets, end of period B $ $ $ 26.9 $ $ Net asset value (s) D $ 7,791 $ 4,695 $ 1,139 $ 553 $ 86 Securities outstanding D 28, ,164 42,393 2,982 3,46 Management expense ratio E,F 2.27% 2.3% 2.28% 2.25% 2.25% Management expense ratio before waivers or absorptions E,F 2.33% 2.36% 2.32% 2.25% 2.25% Trading expense ratio G.39%.45%.26%.42%.49% Portfolio turnover rate H.98% 6.53% 11.81% 1.26% 1.88% Net asset value per security, end of period $ $ $ $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series E1 ended May 31, Periods ended November 3, 216 J Net assets, beginning of period B $ 12.1 $ 1. Total revenue Total expenses (excluding distributions) (.14) (.2) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.15) Return of capital Total distributions B,C (.15) Net assets, end of period B $ $ 12.1 Net asset value (s) D $ 3,964 $ 23,862 Securities outstanding D 2,343,727 1,987,475 Management expense ratio E,K 2.21% 2.21% Management expense ratio before waivers or absorptions E,K 2.27% 2.27% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $

11 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series E1T5 ended May 31, Periods ended November 3, 216 J Net assets, beginning of period B $ 23.1 $ 2. Total revenue Total expenses (excluding distributions) (.26) (.41) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.28) Return of capital (.52) (.87) Total distributions B,C (.8) (.87) Net assets, end of period B $ $ 23.1 Net asset value (s) D $ 1,656 $ 1,213 Securities outstanding D 68,682 53,384 Management expense ratio E,K 2.17% 2.25% Management expense ratio before waivers or absorptions E,K 2.23% 2.31% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series E2 ended May 31, Periods ended November 3, 216 J Net assets, beginning of period B $ 12.2 $ 1. Total revenue Total expenses (excluding distributions) (.14) (.2) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.16) Return of capital Total distributions B,C (.16) Net assets, end of period B $ $ 12.2 Net asset value (s) D $ 1,987 $ 7,349 Securities outstanding D 831, ,581 Management expense ratio E,K 2.17% 2.17% Management expense ratio before waivers or absorptions E,K 2.23% 2.23% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $

12 Financial Highlights continued Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series E2T5 ended May 31, Periods ended November 3, 216 L Net assets, beginning of period B $ 2.39 $ 2. Total revenue Total expenses (excluding distributions) (.24) (.9) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.25) Return of capital (.46) (.23) Total distributions B,C (.71) (.23) Net assets, end of period B $ $ 2.39 Net asset value (s) D $ 525 $ 732 Securities outstanding D 12,327 47,463 Management expense ratio E,M 2.22% 2.24% Management expense ratio before waivers or absorptions E,M 2.28% 2.29% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series E3 ended May 31, Periods ended November 3, 216 J Net assets, beginning of period B $ 12.2 $ 1. Total revenue Total expenses (excluding distributions) (.13) (.19) Realized gains (losses).75.4 Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.17) Return of capital Total distributions B,C (.17) Net assets, end of period B $ $ 12.2 Net asset value (s) D $ 3,855 $ 1,449 Securities outstanding D 291, ,433 Management expense ratio E,K 2.8% 2.9% Management expense ratio before waivers or absorptions E,K 2.14% 2.15% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $

13 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series E4 ended May 31, Periods ended November 3, 216 J Net assets, beginning of period B $ 12.3 $ 1. Total revenue Total expenses (excluding distributions) (.13) (.19) Realized gains (losses).72.4 Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.18) Return of capital Total distributions B,C (.18) Net assets, end of period B $ $ 12.3 Net asset value (s) D $ 5,884 $ 2,51 Securities outstanding D 444,39 28,611 Management expense ratio E,K 2.2% 2.2% Management expense ratio before waivers or absorptions E,K 2.8% 2.8% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series P1 ended May 31, Periods ended November 3, 216 N Net assets, beginning of period B $ 1.6 $ 1. Total revenue Total expenses (excluding distributions) (.6) (.11) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.26) (.75) Return of capital Total distributions B,C (.26) (.75) Net assets, end of period B $ $ 1.6 Net asset value (s) D $ 33,124 $ 16,658 Securities outstanding D 2,88,57 1,617,41 Management expense ratio E,O 1.7% 1.8% Management expense ratio before waivers or absorptions E,O 1.14% 1.14% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $

14 Financial Highlights continued Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series P1T5 ended May 31, Periods ended November 3, 216 N Net assets, beginning of period B $ 2.22 $ 2. Total revenue Total expenses (excluding distributions) (.11) (.21) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.49) (1.49) Return of capital (.45) (.89) Total distributions B,C (.94) (2.38) Net assets, end of period B $ $ 2.22 Net asset value (s) D $ 2,41 $ 1,555 Securities outstanding D 94,144 76,96 Management expense ratio E,O 1.9% 1.9% Management expense ratio before waivers or absorptions E,O 1.16% 1.16% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series P2 ended May 31, Periods ended November 3, 216 N Net assets, beginning of period B $ 1.6 $ 1. Total revenue Total expenses (excluding distributions) (.6) (.1) Realized gains (losses) Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.26) (.75) Return of capital Total distributions B,C (.26) (.75) Net assets, end of period B $ $ 1.6 Net asset value (s) D $ 13,575 $ 3,954 Securities outstanding D 1,216,23 373,99 Management expense ratio E,O 1.2% 1.3% Management expense ratio before waivers or absorptions E,O 1.9% 1.9% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $

15 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series P2T5 ended May 31, P Net assets, beginning of period B $ 2. Total revenue Total expenses (excluding distributions) (.7) Realized gains (losses).3 Unrealized gains (losses) 1.54 Total increase (decrease) from operations B 1.5 From net investment income (excluding dividends) From dividends From capital gains Return of capital (.42) Total distributions B,C (.42) Net assets, end of period B $ 21.9 Net asset value (s) D $ 142 Securities outstanding D 6,742 Management expense ratio E,Q 1.4% Management expense ratio before waivers or absorptions E,Q 1.12% Trading expense ratio G.39% Portfolio turnover rate H.98% Net asset value per security, end of period $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series P3 ended May 31, Periods ended November 3, 216 N Net assets, beginning of period B $ 1.61 $ 1. Total revenue Total expenses (excluding distributions) (.5) (.9) Realized gains (losses).74.5 Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.27) (.75) Return of capital Total distributions B,C (.27) (.75) Net assets, end of period B $ $ 1.61 Net asset value (s) D $ 4,4 $ 2,19 Securities outstanding D 347,75 198,728 Management expense ratio E,O.95%.95% Management expense ratio before waivers or absorptions E,O 1.2% 1.1% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $

16 Financial Highlights continued Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series P3T5 ended May 31, P Net assets, beginning of period B $ 2. Total revenue Total expenses (excluding distributions) (.7) Realized gains (losses).3 Unrealized gains (losses) 1.55 Total increase (decrease) from operations B 1.51 From net investment income (excluding dividends) From dividends From capital gains Return of capital (.42) Total distributions B,C (.42) Net assets, end of period B $ 21.9 Net asset value (s) D $ 325 Securities outstanding D 15,39 Management expense ratio E,Q.97% Management expense ratio before waivers or absorptions E,Q 1.4% Trading expense ratio G.39% Portfolio turnover rate H.98% Net asset value per security, end of period $ Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series P4 ended May 31, Periods ended November 3, 216 N Net assets, beginning of period B $ 1.62 $ 1. Total revenue Total expenses (excluding distributions) (.5) (.9) Realized gains (losses).98.7 Unrealized gains (losses) Total increase (decrease) from operations B From net investment income (excluding dividends) From dividends From capital gains (.27) (.75) Return of capital Total distributions B,C (.27) (.75) Net assets, end of period B $ $ 1.62 Net asset value (s) D $ 231 $ 1,322 Securities outstanding D 19, ,493 Management expense ratio E,O.91%.92% Management expense ratio before waivers or absorptions E,O.99%.99% Trading expense ratio G.39%.45% Portfolio turnover rate H.98% 6.53% Net asset value per security, end of period $ $

17 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Series P5 ended May 31, R Net assets, beginning of period B $ 1. Total revenue Total expenses (excluding distributions) (.1) Realized gains (losses) Unrealized gains (losses).24 Total increase (decrease) from operations B.23 From net investment income (excluding dividends) From dividends From capital gains Return of capital Total distributions B,C Net assets, end of period B $ 1.23 Net asset value (s) D $ 2,1 Securities outstanding D 196,49 Management expense ratio E,S.85% Management expense ratio before waivers or absorptions E,S.92% Trading expense ratio G.39% Portfolio turnover rate H.98% Net asset value per security, end of period $

18 Financial Highlights continued Financial Highlights Footnotes A This information is derived from the Fund s audited annual and/or unaudited interim financial statements. Periods beginning on or after January 1, 213 follow International Financial Reporting Standards (IFRS) and periods prior to January 1, 213 follow Canadian Generally Accepted Accounting Principles (Canadian GAAP). The net assets attributable to securityholders per security presented in the financial statements may differ from the net asset value calculated for fund pricing purposes. An explanation of these differences can be found in the notes to financial statements. For reporting periods ending after January 1, per security comparative figures (except for net asset value per security, end of period) have been conformed to the current rounding presentation of two decimal places. As a result, reporting periods ending prior to January 1, may not foot due to this rounding change. B C D E F G H Net assets and distributions are based on the actual number of securities outstanding at the relevant time. The increase (decrease) from operations is based on the weighted average number of securities outstanding over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per security. Distributions were paid in cash or reinvested in additional securities of the Fund, or both, and excludes any applicable distributions of management fee reduction to securityholders. This information is provided as at period end of the year shown. Management expense ratio is based on total expenses (excluding distributions, commissions and other portfolio transaction costs) for the stated period and is expressed as an annualized percentage of daily average net asset values during the period, including the Fund s pro-rata share of estimated expenses incurred in any underlying investment fund, if applicable. Effective November 1, 214, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. The trading expense ratio represents total commissions and other portfolio transaction costs expressed as an annualized percentage of daily average net asset value during the period, including the Fund s pro-rata share of estimated trading costs incurred in any underlying investment fund, if applicable. The Fund s portfolio turnover rate indicates how actively the Fund s portfolio adviser manages its portfolio investments. A portfolio turnover rate of 1% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the course of the year. The higher the Fund s portfolio turnover rate in a year, the greater the trading costs payable by the Fund in the year, and the greater chance of an investor receiving taxable capital gains in the year. There is not necessarily a relationship between a high portfolio turnover rate and the performance of the Fund. The portfolio turnover rate is calculated based on the lesser of purchases or sales of securities divided by the weighted average market value of the portfolio securities, excluding short-term securities. For periods greater than six months, but less than a full fiscal year, the portfolio turnover rate is annualized. I For the period April 17, 213 (commencement of sale of securities) to November 3, 213. J For the period February 5, 216 (commencement of sale of securities) to November 3, 216. K Effective February 9, 216, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. L For the period September 16, 216 (commencement of sale of securities) to November 3, 216. M Effective September 2, 216, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. N For the period December 4, 215 (commencement of sale of securities) to November 3, 216. O Effective December 8, 215, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. P For the period January 26, (commencement of sale of securities) to May 31,. Q Effective January 3,, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. R For the period April 21, (commencement of sale of securities) to May 31,. S Effective April 25,, the manager of the Fund has waived a portion of its administration fee and as of the date of the MRFP has continued to provide the Fund with such waivers. The manager may terminate the waiver at any time, at its sole discretion. It is not known when such waivers will be terminated. 16

19 Management and Advisory Fees Fidelity serves as manager of the Fund. The Fund pays Fidelity a monthly management fee for its services, based on the net asset value of each Series, calculated daily and payable monthly. Fidelity uses these management fees to pay for sales and trailing commissions to registered dealers on the distribution of the Fund securities, as well as for general investment management expenses. Dealer compensation represents cash commissions paid by Fidelity to registered dealers during the period and includes upfront deferred sales charge and trailing commissions. This amount may, in certain circumstances, exceed 1% of the fees earned by Fidelity during the period. For new Funds or Series the amounts presented may not be indicative of longer term operating periods. Management Fees Dealer Compensation Investment management, administration and other Series A 2.% 68.78% 31.22% Series B 1.85% 54.5% 45.95% Series F.85% 1.% Series F5.85% 1.% Series F8.85% 1.% Series T5 2.% 74.57% 25.43% Series T8 2.% 86.92% 13.8% Series S5 1.85% 54.5% 45.95% Series S8 1.85% 54.5% 45.95% Series E % 54.79% 45.21% Series E1T % 54.79% 45.21% Series E2 1.8% 55.56% 44.44% Series E2T5 1.8% 55.56% 44.44% Series E % 56.34% 43.66% Series E % 57.97% 42.3% Series P1.825% 1.% Series P1T5.825% 1.% Series P2.8% 1.% Series P2T5.8% 1.% Series P3.775% 1.% Series P3T5.775% 1.% Series P4.725% 1.% Series P5.7% 1.% 17

20 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Past Performance The performance information shown assumes that all distributions made by the Fund in the periods shown were reinvested in additional securities of the Fund. The performance information does not take into account sales, redemption, distribution or other optional charges that would have reduced returns or performance. How the Fund has performed in the past does not necessarily indicate how it will perform in the future. Year-by-Year Returns The following bar chart shows the Fund s annual performance for each of the years shown, and illustrates how the Fund s performance was changed from year to year. In percentage terms, the bar chart shows how much an investment made on the first day of each financial year would have grown or decreased by the last day of each financial year. For each Series in the Year-by-Year Returns table below, the most recent returns stated are for the current six month period. Series A Series F Commencement of Operations is June 2, 28 Series B Commencement of Operations is April 17, 213 Series F Commencement of Operations is June 2, 28 Series F Commencement of Operations is April 17, 213 Series T Commencement of Operations is June 2, 28 Commencement of Operations is April 17,

21 Series T8 Series E1T Commencement of Operations is April 17, 213 Commencement of Operations is February 5, 216 Series S5 Series E Commencement of Operations is April 17, 213 Commencement of Operations is February 5, 216 Series S8 Series E2T Commencement of Operations is April 17, 213 Commencement of Operations is September 16, 216 Series E1 Series E Commencement of Operations is February 5, 216 Commencement of Operations is February 5,

22 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Past Performance continued Series E4 Series P2T Commencement of Operations is February 5, 216 Commencement of Operations is January 26, Series P1 Series P Commencement of Operations is December 4, 215 Commencement of Operations is December 4, 215 Series P1T5 Series P3T Commencement of Operations is December 4, 215 Commencement of Operations is January 26, Series P2 Series P Commencement of Operations is December 4, 215 Commencement of Operations is December 4, 215 2

23 Series P Commencement of Operations is April 21, 21

24 Fidelity Special Situations Class of the Fidelity Capital Structure Corp. Summary of Investment Portfolio as at May 31, Sector Mix % of Fund s Net Assets as at 5/31/17 % of Fund s Net Assets as at 11/3/16 Information Technology Consumer Discretionary Materials Industrials Financials Energy Investment Companies 4.7. Health Care Consumer Staples Telecommunication Services 2.4. Others (Individually Less Than 1%)..2 Cash and Cash Equivalents Net Other Assets (Liabilities). 1.5 Market Capitalization % of Fund s Net Assets as at 5/31/17 % of Fund s Net Assets as at 11/3/16 Large Mid Small Market Capitalization is a measure of the size of a company. It is calculated by multiplying the current share price by the number of outstanding common shares of the company. The Fund defines small cap as less than $2 billion, mid cap as between $2 billion and $1 billion, and large cap as over $1 billion in capitalization. Geographic Mix % of Fund s Net Assets as at 5/31/17 % of Fund s Net Assets as at 11/3/16 Canada United States of America Netherlands 2.3. Japan 1.2. Others (Individually Less Than 1%) Cash and Cash Equivalents Net Other Assets (Liabilities). 1.5 Top 25 Issuers % of Fund s Net Assets 1. Cash and Cash Equivalents SPDR Gold Trust ETF Shopify, Inc Square, Inc West Fraser Timber Co. Ltd Take-Two Interactive Software, Inc Kinaxis, Inc Agnico Eagle Mines Ltd Rogers Communications, Inc Canadian National Railway Co DH Corp Fairfax India Holdings Corp Pioneer Natural Resources Co Open Text Corp Alimentation Couche-Tard, Inc Microsoft Corp Gildan Activewear, Inc Amazon.com, Inc Apple, Inc Mobileye NV Alphabet, Inc Norbord, Inc Spin Master Corp Detour Gold Corp Centennial Resource Development, Inc Total Fund Net Assets $347,491, Where applicable, the information in the above tables includes the Fund s pro-rata share of the investment in any Fidelity Underlying Fund. The summary of investment portfolio may change due to ongoing portfolio transactions of the investment fund. The most recent annual report, semi-annual report, quarterly report, fund facts document or simplified prospectus for the investment fund and/or underlying fund is available at no cost, by calling , by writing to us at Fidelity Investments Canada ULC, 483 Bay St. Suite 3, Toronto ON M5G 2N7 or by visiting our web site at or SEDAR at 22

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28 Fidelity Capital Structure Corp. 47 2nd Street S.W., Suite 82 Calgary, Alberta T2P 2Y3 Manager and Registrar Fidelity Investments Canada ULC 483 Bay Street, Suite 3 Toronto, Ontario M5G 2N7 Custodian State Street Trust Company of Canada Toronto, Ontario Visit us online at or call Fidelity Client Services at Fidelity s mutual funds are sold by registered Investment Professionals. Each Fund has a simplified prospectus, which contains important information on the Fund, including its investment objective, purchase options, and applicable charges. Please obtain a copy of the prospectus, read it carefully, and consult your Investment Professional before investing. As with any investment, there are risks to investing in mutual funds. There is no assurance that any Fund will achieve its investment objective, and its net asset value, yield, and investment return will fluctuate from time to time with market conditions. Investors may experience a gain or loss when they sell their securities in any Fidelity Fund. Fidelity Global Funds may be more volatile than other Fidelity Funds as they concentrate investments in one sector and in fewer issuers; no single Fund is intended to be a complete diversified investment program. Past performance is no assurance or indicator of future returns. There is no assurance that either Fidelity Canadian Money Market Fund or Fidelity U.S. Money Market Fund will be able to maintain its net asset value at a constant amount. The breakdown of Fund investments is presented to illustrate the way in which a Fund may invest, and may not be representative of a Fund s current or future investments. A Fund s investments may change at any time. Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC E FICL-SSIT-CS-MRFPS-717